WADHWANIFOUNDATION|CREATING JOBSCHANGING LIVES

CREATING JOBS CHANGING LIVES

Next-Generation Fellowship Program

Customer and Markets

https://www.wfglobal.org

WA DHWANI FOUNDATION |CREATING JO BSCHANGING LIVES

Overview of the
program and your
learning journey over
the 14 weeks:
 CONCEPTS
● Who is a consumer? Howis aconsumer different froma
customer?
● What is Segmentation and Targeting?What is
a niche market?
● What is a customerpersona and why doyou
need tocreateone?
● What are the major market types?

By the endof the week,

youwill beable to:
● Identifythe markettypefor your venture
● Segmentyour customersand carvea niche
● Estimate yourmarketsize
● Refine your customer persona
● Conduct actionable customer conversations

Steps:
1. Market Identification
2. Customersegmentation
3. Carving a Niche
4. Market sizing
5. CustomerPersona

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WADHWANIFOUNDATION|CREATING JOBSCHANGING LIVES
Market Types Market
Types
Market
Segment
Customer
Niche
Market
sizing
Persona

You have identifieda problem and defined it clearly and succinctly.Now,how can you gauge the
market'sdemand without incurringheavymarketingspend or using pricey tools?This is a
questionthathas confounded entrepreneurs fordecades.The trick is in the words"gauge the
market'sdemand.“To estimatemarket demandyouneed to identifywhichkind ofmarket is your
start-upgoing tooperate in.There are essentially4 market types.Eachof thesefour market types
has different salesmodels,sales cycles,capitalrequirements and adoptionrates. Lets look at each of
them:
Exi s ting New
• Existing,
• Re-segmented or Niche
• New
Re-
Cl one
• Clone segmented

ExistingMarket - When investors and entrepreneurs goafter an existing market – the

advantageis thatthere’slittleor no market risk. In thismarket type:
• Competitors exist
• Customers want and need better performance
• Technology is usually the driving factor
• The positioningis drivenby theproductand how much valuecustomers placeon itsfeatures
• The riskis to thinkthatcompetitors aredumb or too slow
• There is no "chasm"thatyouneed to fill.The chasm is the gap between early adoptersand
the mainstream customers ina market.
Eg: A venture tryingto set up an e-commerce site like Amazon is tryingto enter an existing
market

New Market - In this market type:

• Customersdonot existin the present,so revenue generation takes years
• Market size is zero
• Customers need to be made aware of their needs
• You mustconsiderwhat factorscanyou create thathas never been offered
• The chasm is biggest here because you will only be selling to the very early adopters
Eg: SpaceX

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WADHWANIFOUNDATION|CREATING JOBSCHANGING LIVES
MarketTypes Market
Types
Market
Segment
Customer
Niche
Market
sizing
Persona

Re-segmented Market: The Re-segmented market is a hybrid between a New market and an
Existing market in the sense that it is a New Market created from a small segment from an
existingmarket.Thefeaturesof thismarket typeare:
• Low cost
• New Niche

In this market type:

• Evaluatefactorsthatyour industryhaslong competed on and eliminate those
• Evaluatewhat factorscan be reduced well below the industrystandards
• Evaluatewhat factorscan be increased abovethe industrystandards
• Evaluatewhat factorscan be created thathave never been offered
• There is a bit of a chasm in this typeof market
Eg: Southwestairlinestook on theairlineindustryby bringingup thetraditionalhub-and-spoke
modeland providingjustvery limitedservicesbutforan extremely lowprice.

Clone Market: In a Clone market,customers are knownbecauseyou copiedan existing

market.It is called a Clone because,in thismarket type, you are going to localizeall those
specific issues for your country or region. That said, it takes a foreign business model and
adapts it to local conditions. Thereare no competitorsifyou are the firstone and the riskmay be
in misjudging thelocal needs.This market type:
• Adaptsa foreign businessmodel to a local condition(language, culture,import restrictions, and
local regulations)
• Needsa large number of customers,typically>100million
Eg: Most countries havea local versionof Uber today and theyhave tried to clone the business
model by makingsuitableadjustmentsforlocal conditions.

4 types of markets
Steve Blank - Stanford / UC Berkely

4 types of markets, 4 ways to gauge them

The Wall Street Journal

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 Market
Segmentation
Market Market Customer Market Persona
Types Segment Niche sizing

Lets say you have a brilliant ideafor a an everydayutilityitem

like a Mop – who would be the target customer segment? Well if
you say –” anyone who needs a mop” – then you’re falling into
a classictrap,i.e.a non-specificmarket. Market Segment Niche

As an entrepreneur with limited resources,youneed to have segment themarket and identify

the sliceof the market thatyou are goingto go after.That is your Niche.

Market Segmentation is the practice of dividing your target market Demographic Psychographic
- Who - Why
into approachable groups. You create subsets of a market based on
demographics,needs, priorities, common interests, and other
S egmentation
psychographicor behavioral criteria used to better understandthe target
audience.Hereare the 4 basictypesof Market Segments
Geographic Behavioral
- Where - How
Demographic Psychographic Geographic Behavioral

Age Personality traits Country Spending habits

Gender Hobbies Region Purchasing habits
Ethnicity Life goals City Browsing habits
Income Values Postal code Brand Interactions
Education Beliefs Brand Loyalty
Religion Lifestyles Previous feedback
Profession

What You Need to Know About Segmentation

Harvard Business Review
Market Segmentation Examples

Demographic Geographic Psychographic Behavioral

(Students) (Localization for India) (Lifestyle based) (Repeat Customers)

WADHWANIFOUNDATION|CREATING JOBSCHANGING LIVES 7

Find your
Niche
Market Market Customer Market Persona
Types Segment Niche sizing

Identifying your Niche - Niche marketing strategy focuses on a micro-segment of the

market.Nichemarkets get betterreferrals for entrepreneurs,more repeat business,andhave
lesscompetition dueto itsuniquenature.All these advantages alsoresultin easier
marketingof product/service.To findyour Niche:

• Understand what prompts customers towant to buy products/services

• Develop a mental picture of your customers
• Acquire focused knowledgeabout your market

Niche Marketing
National EntrepreneurshipNetwork - Wadhwani Foundation

How to thrive in Niche Markets

Entrepreneur.com

Niche Products examples

Conscious consumers
Bee’s Wrap is looking to replace plastic wrap with options
made from beeswax. The natural alternative to food
storage is not onlyenvironmentaly friendly,but alsomore
cost-effectivefor consumers becausethey’rereusable.

LGBTQ+ community
TomboyX,an underwearbrand saw the opportunityto
hone in on a specific consumer group’s needs to sell
underwear “for any body”.

Key questions to ponder on:

• From the market segmentation – whichslicewould you liketo own? Whatis your niche?
• How are the needs of your Niche different from the rest of themarket?
• What is the size of your Niche?
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 Estimate Your
Market Size Market
Types
Market
Segment
Customer
Niche
Market
sizing
Persona

By now you havesegmented themarket and definedyourniche.Before you progress further,it

may be well worth it to estimate yourmarket size and assessyour strategytocater to this
market.To do thisyou need to get conversant withthreeconcepts:
TAM
TAM - Total addressable market or TAM refersto thetotal market
demandfor a product or service. It’sthemaximum amount of
SAM
revenue a business can possibly generate by selling their product
or service in a specific market.
SAM - ServiceableAddressableMarket- estimatestheportion of
the TAM, that you can acquire given your limitations– SOM
geographic,demographic, marketing and advertising spend,
logistics,etc.

SOM - ServiceableObtainable Market- determinesthathow many customersfrom the SAM

would realistical y purchase yourproduct.The SOM is a subsetof the SAMthat is restricted by:
• Natural barriers such as distanceorlanguage
• Limited capacity,for example productioncapacityor marketing reach
• Loss of market share to competitors
Two Approaches to calculating Market Size:
• Top Down Approach: A top down analysisis calculatedby determiningthetotalmarket,
then estimatingyour share of that market.
• TAM = Total no. of customers * average price of product
• SAM = Target segment of TAM * average price of product
• SOM = Last year’s market share# * average price of product
• # In caseLast year’s market shareis not availableyoucan substitutewith theshare
thatyou would liketo take away from your closestcompetitor
• Bottom-up Approach:A bottom-up approachtries toestimate theactual usersof the
product and how many would realisticaly become customers.
• Total number of users
• Total number of users within my geographical reach
• % of users who can be reached my company (SAM)
• % of userswho may actuallyshowinterest (SOM)

Why A Bottom-UpTotalAddressable MarketExercise Is The Best First Step

Forbes

WADHWANIFOUNDATION|CREATING JOBSCHANGING LIVES 9

Customer
Persona Market
Types
Market
Segment
Customer
Niche
Market
sizing
Persona

Now that you have identified your niche, the next step is to dive into it and own it. You need
to know your customer better than anyone else and here the concept of Customer persona
comes in very handy. But hang-on . Remember that even within your niche you need to go
those who will adopt your product first. Here the concept of the Innovation – Diffusion Curve
also known as the Product Adoption Curvecomes handy.
Innovators - They are these buyers who love to
have innovative products. They are seeking this
all the time and it is part of their lifestyle.
Early adopters - appreciate innovations and are
ready to adopt new products even if they perfect
or not developed from a technicalpointofview.
Early Majority & Late Majority- Innovative
technology is not the key for making their
decision.Theyare drivenby analysis of different
standard factorssuch as Price,quality,needs, etc

Laggards: They are thelast to adopt an innovation.Unlikesomeof the previous categories,

individualsin this category show littletono opinionleadership.These individualstypicalyhave an
aversion to change-agents. How to identify Early Adopters
Forbes

So, withinyour niche take your products firsttothe innovators and

early adopters. It is important to remember that the purchase
process is not as simple and straight forward as we would imagine
it to be. There are many people that can influence the buying
decision. In manycases,theend user may not be the economic
buyer. You need to take these factors and all these personas into
consideration.
How to create a Persona? Your customer persona has to have the following:
• A name – something relatable
• A face – a photograph (fictional but indicative)
• Demography,Geography – Age, City,Occupation
• A Day in the life– What are the highlights? What are thefrustrations?
• Fears and Motivators– What drivesme? Whatkeeps me awake at night?
For B2B ventures,thepersona should bedrawnup for the key decisionmakers.

An introductionto Customer Personas

- Dan Kranzler, serial entrepreneur
WADHWANIFOUNDATION|CREATING JOBSCHANGING LIVES 10
Customer
Conversations Market
Types
Market
Segment
Customer
Niche
Market
sizing
Persona

STEP 1: SET THE STAGE

"TELL ME ABOUT THE PROBLEM THAT YOUR ARE FACING?
Share your hypothesis about theproblem so thatyou can test it. You can also
keep it open endedand identifya problem to solve

STEP 2: VERIFYCUSTOMER SEGMENT

"WHATRESPONSIBILITIES ARE YOU INVOLVEDIN? WHO ELSE DO YOU THINK
DEALS WITH THIS PROBLEM?" Verifyif thisperson is a buyer,decision maker,
recommender,influenceror the user? Try to understandtheir role/job,
demographics, who they report to, or who influencestheirdecisions.

STEP 3: TELL ME ABOUT A TIME

"TELL ME ABOUT YOUR EXPERIENCE.WHATWAS SO FRUSTRATING ABOUT IT?"
Ask the customers to tell you about a time they experienced this problem. Pay
attention to whether they have tried to solve this problem and how they did it.
Observe theirreactions.

STEP 4: A DAY IN THE LIFE

"WALK ME THROUGH A TYPICAL DAY FOR YOU. HOW DOES THIS PROBLEM PLAY
INTO YOUR DAY TO DAY LIFE?"
Ask thecustomersto walkyou through a typical dayin their life.Keep thisopen
ended.

STEP 5: PROBLEM RANKING

"ON A SCALE OF 1-9 HOW WILLINGARE YOU TO PAY FOR A PRODUCT THAT
WILL SOLVE YOUR PROBLEM?" Highlight the top 3 problems the customer faces.
Then ask him/her to rank it in a couple of different ways.

STEP 6: THE ASK/WRAPIT UP

"WOULD YOU MIND ME GETTING BACK IN TOUCH/BRINGING A BETA TESTER/
INTRODUCING ME TO SOMEONE WHO MIGHT BE FACING THE PROBLEM?"
Confirm your key takeawaysand make sureyou heard the customer correctly.If
your want their feedback for your product, ask now

WADHWANIFOUNDATION|CREATING JOBSCHANGING LIVES 11

Call toaction!
Step1: Identify which kind of market you will be Existing New

functioning in

Identify the aspects with respect to: Re-

Cl one
1. Key Players
segmented

2. Recent Innovations
3. Sales Cycles
4. Adoption Rates
Demographic Psychographic
- Who - Why
Step2: Createyourcustomersegments
o Gather data about your potential customers S egmentation

o Select your segmentation variables

o Validate yourcustomer segments Geographic Behavioral
- Where - How

Step3: Identify a ‘Niche Market’:

• Whichslice would you liketo own? What is your niche?
• How arethe needs of yourNichedifferentfromthe restof the market?
• What is the size of your Niche?

Step4: Estimate your market size

• Use boththetop-down andbottom-upapproach
• Analyse which one suits your venture better

Step5: Create your Customer Persona

Template in the Handbook

Step6: HavemeaningfulCustomer Conversations

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FINAL COVER

[email protected]

WWADHWADHWANIANIFFOUNOUNDDAATIONTION||CREACREATINGTINGJJOBSOBSCCHH ANGINGANGINGLIVLIVESES
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